After a decade of setting the tone in Europe, Germany's Merkel's power is fading

BERLIN (Reuters) - It is hard to think of what more Angela Merkel could have done over the past weeks to nudge fellow European leaders toward a post-Brexit consensus.

In the run-up to Friday's EU-27 summit (the bloc minus Britain) in Bratislava, the German chancellor met personally with 24 of her 26 counterparts.

She traveled to Warsaw, to Tallinn, to Prague, to Paris and to the Italian island of Ventotene. In the end, all the careful consulting, the earnest effort to show everyone that Germany was not setting the agenda on its own, came to nothing.

Bratislava was a flop. France's Francois Hollande and Slovak host Robert Fico played along, describing the rather thin summit conclusions, dubbed the "Bratislava Roadmap", as a step forward. But Italy's Matteo Renzi and Hungary's Viktor Orban began attacking the document before the ink was dry.

"I don't know what Merkel is referring to when she talks about the 'spirit of Bratislava'," Renzi said at the weekend. "If things go on like this, instead of the spirit of Bratislava we'll be talking about the ghost of Europe."

For nearly a decade, Merkel has been setting the direction in Europe. The bloc's response to the euro crisis was made in Berlin. So was the Minsk deal for eastern Ukraine, and last year's EU-Turkey pact to cut the migrant flow to Europe.

But Bratislava showed that Merkel's deepening woes at home, underscored by the abysmal result for her Christian Democratic Union (CDU) in a regional vote in Berlin on Sunday, is eroding her influence beyond German borders.

"Merkel is discovering in the aftermath of the refugee crisis that she doesn't have too many friends in Europe. And she needs friends and allies on a lot of issues," said a former senior EU official who worked closely with the chancellor during the euro crisis.

The official, who declined to be identified, said he saw no alternative to Merkel in the CDU, in Germany or in Europe. Still, he believes resistance to German leadership will only grow.

Merkel is the face of German austerity and of open European borders -- the two policies that are energizing populist parties across the bloc, and, officials in some European capitals whisper, may have swung the British vote towards Brexit.

REUTERS/Wolfgang Rattay

Weakened figure

The chances of Merkel hunkering down and trying to win a fourth term in an election next year remain high despite a string of state election setbacks and a damaging spat with her Bavarian allies, the Christian Social Union (CSU), over her welcoming refugee policy.

At an unusually self-critical news conference on Monday in which she acknowledged lingering divisions in Europe on refugees, she declined to say whether she would be a candidate.

But if she does run and win, she will do so as a weakened figure at home and in Europe. That could have implications on a range of European fronts.

Already, Berlin finds itself on the back foot on economic policy, forced to accept the toothlessness of EU budget rules in the case of deficit-violators Spain and Portugal, and the easy money policies of the European Central Bank.

Merkel has also conceded defeat in her year-long quest to convince Berlin's EU partners to accept migrant quotas, agreeing in Bratislava to let eastern European states off the hook by embracing their proposal of "flexible solidarity" in the refugee crisis. Despite that, Orban felt the need to condemn her policies as "self-destructive and naive".

Holding the EU together on sanctions imposed on Russia over the Ukraine crisis could be the next test of German influence.

Despite another flurry of shuttle diplomacy by Foreign Minister Frank-Walter Steinmeier, German officials acknowledge in private that they are being forced to think about alternatives to the Minsk deal, to which the lifting of sanctions is tied.

"The question is how you transform Minsk into something else," one official said. "It has become an increasingly frustrating exercise which has political costs for those involved."

Renzi and Orban, who pushed back against Merkel in Bratislava, are among the biggest skeptics in the EU of the economic and financial sanctions imposed on Moscow two years ago for its annexation of Ukraine's Crimea peninsula and support for rebels in the east.

Over the weekend, Slovakia's Fico called the sanctions "ineffective" and damaging to the EU. Russia, he told Reuters in an interview, had done more than Ukraine to meet its commitments under Minsk.

French vote key

The other big test for Merkel and the EU is Brexit, the elephant in the room in Bratislava. Her preference since Britain's referendum in June has been to seek a deal with London that keeps the British close.

But here too, she faces powerful headwinds, particularly from the French, who are promising to make Brexit as painful as possible for the British.

The Berlin-Paris relationship, for decades the driver of closer European integration, may hold the key for how the bloc copes with a new era of disintegration.

It could also help determine whether Merkel continues to play an important role in shaping policy in Europe or becomes a weakened, more isolated figure.

French President Francois Hollande. Thomson Reuters

Hollande, who stood loyally by her in Bratislava, is widely expected to be pushed out of office in the spring.

If he is replaced by Alain Juppe, the centrist former prime minister, then some see a chance for Merkel to reestablish a degree of consensus and direction for Europe.

"In the best of all worlds, you will end next year with Chancellor Merkel and President Juppe. Then Germany and France could become the motor of more Europe again," said the former EU official.

But if the winner of the French election is former President Nicolas Sarkozy, some fear that all bets are off.

When they ruled together in Berlin and Paris between 2007 and 2012, Merkel and Sarkozy overcame a rocky start, gravitating towards each other over years of intense crisis-fighting. By the end, they were known by the collective moniker "Merkozy".

But in recent months, Sarkozy positioned himself in opposition to Merkel on many of the big issues that count, from refugees and national identity, to Turkey, Russia, Brexit and even climate change.

"The divide with Sarkozy has become vast," said one senior German official. "If he is elected it could be a huge problem for Merkel."

Then, Bratislava may be looked back upon as the moment when Merkel lost Europe.